IMF国际货币组织全球-Portugal_2019-Article-IV-Consultation_75页_1mb

IMF 2019 Article IV Consultation with Portugal Summary

Core Content

The 2019 Article IV consultation with Portugal by the IMF highlighted the country's economic progress and ongoing challenges. The consultation took place from May 7–17, 2019, with the staff report finalized on June 19, 2019. The Executive Board concluded the consultation on July 8, 2019, and the key findings and recommendations are outlined below.

Main Views and Key Information

Economic Performance

• Growth: After a strong 2017, growth eased in 2018 to 2.1% and is expected to moderate to 1.7% in 2019, converging to a medium-term potential of 1.4%.
• Unemployment: Dropped to a 14-year low, reaching 6.2% in 2019, with employment growth at 1.4% in 2019.
• Inflation: Consumer price inflation remained subdued in 2018, averaging 1.2%, and is expected to gradually rise to 1.5% in 2020.
• Current Account: Expected to maintain moderate deficits in the coming years, though it has improved from a negative balance in 2018.

Fiscal Situation

• Fiscal Deficit: Improved in 2018 to -0.5% of GDP, with the government aiming for a near-balanced budget in 2019 (-0.2% of GDP).
• Public Debt: On a firm downward trajectory, projected to decline to close to 100% of GDP by 2024.
• Fiscal Reforms: The government has made progress in fiscal consolidation, including the early repayment of IMF loans and credit rating upgrades.

Banking Sector

• Balance Sheet Strengthening: Banks have made significant progress in reducing nonperforming loans (NPLs), with the NPL ratio declining from 15.8% in 2016 to 8.5% in 2018.
• Profitability: Despite progress, profitability remains moderate, with banks still facing high legacy assets and concentrated exposures to real estate and sovereign debt.
• Capital Ratios: Capital ratios improved, reaching 13.2% in 2018:Q4, but remain vulnerable to changes in risk premia and sovereign bond yields.

Risks and Outlook

• Downside Risks: Increased due to a less favorable global environment, including weaker European growth, rising protectionism, and potential geopolitical shocks.
• External Risks: Portugal's openness to trade and investment makes it susceptible to global economic downturns and trade tensions.
• Fiscal Risks: The need to accelerate debt reduction to protect against unanticipated shocks and address the fiscal impact of an aging population.
• Structural Challenges: Low investment, weak productivity, and adverse demographics constrain long-term growth potential.

Key Policy Recommendations

A. Macro-Financial Issues and Policies

• Deleveraging: Continue efforts to reduce household and nonfinancial corporate (NFC) debt, especially in the household sector where savings are low.
• Banking Sector: Ensure banks maintain strong capital ratios and continue NPL reduction, while improving asset quality, efficiency, and governance.
• Sovereign Exposure: Address the high concentration of banks' exposures to the sovereign and real estate markets, with a gradual transition to reduce home bias in these areas.

B. External Balance and Policies

• Current Account: Maintain a moderate deficit, with the need to increase domestic savings to avoid new external imbalances.
• Exchange Rates: The real effective exchange rate (REER) remains slightly below pre-crisis levels, which could support competitiveness.

C. Fiscal Issues and Policies

• Fiscal Consolidation: Sustain fiscal consolidation efforts, with a focus on accelerating debt reduction and improving the quality and composition of public spending.
• Pension Reforms: Encourage complementary second- and third-pillar pension schemes to boost private saving and support fiscal sustainability.

D. Structural Issues

• Productivity and Investment: Boost productivity and increase investment, especially in the private sector, to enhance potential growth and reduce balance sheet risks.
• Business Climate: Improve the business environment to foster innovation and competitiveness.
• Public Investment: Shift spending toward greater public investment and examine expenditures on pensions, wages, and health.

Summary of Key Indicators

Conclusion

The IMF acknowledged Portugal's improved economic fundamentals, including lower unemployment and stronger fiscal positions. However, it emphasized the need for continued efforts to strengthen resilience, particularly in the face of external risks and structural challenges. The country's path to convergence with the euro area living standards is expected to be gradual, with a focus on boosting productivity, investment, and domestic savings.